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Transition and Growth in Post-Communist Countries

Transition and Growth in Post-Communist Countries

The Ten-year Experience

Edited by Lucjan T. Orlowski

Transition and Growth in Post-Communist Countries documents the first ten years of economic transition in Central and Eastern Europe.

Chapter 3: Ten years after: what is special about transition countries

Daniel Gros and Marc Suhrcke


? Daniel Gros and Marc Suhrcke INTRODUCTION Much attention has been devoted to transition countries. There is even a special international financial institution, the European Bank for Reconstruction and Development (EBRD), charged to look after the particular problems of countries in transition. Ten years after the start of reforms it is time to ask whether the former centrally planned economies are distinguishable among other countries and whether their special treatment is still justified. A number of existing studies analyse transition economies (TEs) in terms of their prospects of catching up with the developed market economies. Some studies estimate the time required by TEs to catch up with the Western European level of development using a growth regression approach (Barbone and Zalduendo, 1996). Others assess the ‘distance’ of the Central and Eastern European (CEE) countries from Western market economies in terms of macroeconomic indicators such as inflation, budget deficit and so on (Fischer et al., 1997 and 1998; Fischer and Sahay, Chapter 1 in this volume). Krkoska (1999) analyses the macroeconomic fluctuations in TEs relative to those in Western European economies. The EBRD assesses regularly the progress of reform in each of the CEE countries and provides a quantitative evaluation in a number of important areas (for example, enterprise reform, market liberalization, and financial and legal institutions). However, the existing literature treats much richer Western European (OECD) countries as a benchmark model for TEs. It implicitly assumes that all the characteristics that distinguish Europe’s TEs are related to their past centrally planned...

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